HBA-TYH S.B. 1555 76(R)BILL ANALYSIS Office of House Bill AnalysisS.B. 1555 By: Fraser Financial Institutions 4/21/1999 Engrossed BACKGROUND AND PURPOSE In 1997, the legislature authorized the Veterans' Land Board (board) to construct and operate veterans homes by using its existing authority to issue revenue bonds to obtain the state's necessary share for participation in the U.S. Department of Veterans Affairs (DVA) Construction Grants Program. Under that program, the DVA funds up to 65 percent of construction costs. Because Texas was one of only five states with no state veterans homes, DVA gave Texas' grant application the highest priority and quickly approved grants to build four state veterans homes. The board has issued approximately $10 million in revenue bonds to cover the state's share of the construction of the first two homes. The bonds were purchased by USAA Investment Management Company in San Antonio. The DVA has estimated that the aged veteran population in Texas will support up to 42 state veterans homes. To help meet the need, the board has submitted seven more pre-applications for additional veterans homes to the DVA. However, because of the limited amount of available grant money for the DVA, it is unlikely that these applications will be approved by the DVA. The DVA is in need of alternative funding sources to meet the growing demand for high-quality, long-term care facilities for Texas veterans. S.B. 1555 authorizes the board to invest in revenue bonds which are issued under Chapter 164 (Veterans' Financial Assistance Program), Natural Resources Code, using money in the veterans' land fund or veterans housing assistance funds. This bill authorizes the board to accept and administer gifts, grants, or donations for the support, acquisition, construction, operation, enlargement, improvement, furnishing, or equipping of veterans homes. This bill also authorizes the board to enter into agreements with a nonprofit corporation for the solicitation, receipt, and disbursement of the gifts, grants, or donations. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 161.074, Natural Resources Code, to authorize the resolution of the Veterans' Land Board (board) authorizing a bond enhancement agreement to permit designated board officers or employees to act on behalf of the board in the bond enhancement agreement process described in this section. Specifies an exception that the resolution must set the maximum amount and term for the bond enhancement agreement. Specifies that the bond enhancement agreement is not a credit agreement for purposes of Chapter 656, Acts of the 68th Legislature, Regular Session, 1983, Article 717q, V.T.C.S. (Short Term Obligations for Public Utility), regardless of whether the bonds relating to the bond enhancement agreement were issued in part under that law. SECTION 2. Amends Section 161.1732(b), Natural Resources Code, to include in the eligibility requirements regarding custodian collateral provided by this section, letters of credit that are issued by banks and rated as to investment quality not less than A or its equivalent by a nationally recognized investment rating firm as an option among the types of collateral that a securities broker or dealer must provide to the custodian of the veterans' land fund. Makes a nonsubstantive change. SECTION 3. Amends Section 161.312(b), Natural Resources Code, to provide that a notice under this section is sufficient if given by certified mail, rather than registered mail. SECTION 4. Amends Section 162.0042(b), Natural Resources Code, to make conforming changes. SECTION 5. Amends Section 162.052, Natural Resources Code, to make conforming changes. SECTION 6. Amends Section 164.005, Natural Resources Code, by adding Subsections (d) and (e), as follows: (d) Prohibits the board from authorizing the use of any veterans home in a manner that would entitle the United States to recover any amounts pursuant to 38 U.S.C. Section 8136 (recapture provisions of veterans' benefits), as amended, or any successor statute. (e) Authorizes the board to accept and administer gifts, grants, or donations for the support, acquisition, construction, operation, enlargement, improvement, furnishing, or equipping of veterans homes. Authorizes the board to enter into agreements with a nonprofit corporation for the solicitation, receipt, and disbursement of the gifts, grants, or donations. SECTION 7. Amends Section 164.009, Natural Resources Code, to authorize the board to provide for a pledge of and lien or mortgage on the receipts, assets, payments and repayments, other program revenues, other available revenues of the board, and one or more veterans homes, as described by this section. Makes a conforming change. SECTION 8. Amends Section 164.011, Natural Resources Code, to provide that funds established by the board under this chapter are not part of the State Treasury and are not subject to Subchapter F (State Funds Reform Act), Chapter 404, Government Code. Specifies that any provision of this chapter or other law provides for the deposit of money or another thing of value into the funds prevails over the requirements of Subchapter F, Chapter 404, Government Code. Requires the funds to remain under the control of the board as described by this section. Makes conforming and nonsubstantive changes. SECTION 9. Emergency clause. Effective date: upon passage.